RUSSELL 1000, Triangular-Formation Will Provide Confirmation!
Updated
Hello Traders Investors And Community, welcome to this update-analysis about the stock-market and its participants, where we are looking at the RUSSELL 1000 which is a major leading index in the US-sector covering the 1000 biggest companies by market-cap, therefore, representing a serious part which depicts the overall market, we are looking at recent events, the current price-structure-formation and what we can expect the next days, hours and weeks from the index. As the world economic situation is still in a situation where it is recovering by the heavy down moves seen this year it is highly important to notice that there is a big difference between the real economy and the stock market while the real economy was still damaged the stock-market making gains to the upside this can be a highly speculative rally and when the difference increases a possible bull-trap, the next weeks and months will be decisive for the overall market where it has to decide if it can recover from the heavy bearish moves to the downside or shows more increasing of bull-weakness further.
As you can examine when looking at my chart is that the index is trading above the 300-EMA which is marked in black and the 55-EMA which is marked in purple within my chart, these EMAs serving as meaningful support zones which hold the trend to the upside, therefore it is from high significance to hold minimum the 300-EMA in this structure, when considering single stocks from individual companies there are some weaker than the market trading below the EMA structure and some which are strong than the market trading above the EMAs, the weaker ones as I mentioned are good on the short-side and the reverse comes through for the stronger ones on the long-side as the crisis has shown which companies are solid and which do not have the necessary conditions to hold its level during the crisis similar to the dotcom-bubble in 2000 where the market provided a big selection where not every stock survived, in this case to look for these differences in the single stocks should be a smart approach for an arbitrage in the market as there is a high probability that these differences will increase the next months.
Furthermore, the index is trading in this big triangular shape formation which you can watch in my chart marked with the orange triangle, the major trendline which projected from the all-time-high to the current highs is forming the upper boundary here and the lower boundary consists of the rising channel the index is trading in. Now this formation will show a heavy breakout sooner or later, the longer the price stays in this formation the heavier will be the breakout and the confirmation in direction after the breakout. As the index is trading above strong support levels the bullish breakout scenario is more likely at the moment, to be exact there is a 65 % possibility to confirm this triangular shape formation to the upside and only a 35 % possibility to confirm it to the downside. The final breakout will show the confirmation and a trade can be placed, for now the best option is to wait for a breakout which confirms the triangle, and as the bullish breakout is more within the possible spectrum the best option is to prepare according to this scenario.
Remember that the more possible bullish breakout of this triangle does not mean the index and market are completely bullish in the middle and long term. It is in the first line signaling a test of higher remaining levels which can lead to a further conclusion, beside that there is still a real economy which is shaky and the rallies which we have seen are not necessarily fundamentally backed by the needed liquidity from the smart money, last months and weeks we have seen many retail traders rushing into the market and buying which can lead to a speculative rally especially as the smart money is staying out of the market, therefore, new tests of higher levels are definitely possible but the full bullish continuation should be seen with a critical eye as the bear market is still not completely over as soon as the reverse is evidenced. This means we should not take the full bullishness at face value and also keep the reverse perspective in mind to be prepared when new supply enters the market because of inrolling company insolvencies and increasing corona-fears to wage opportunities and possibilities in the right manner.
In this manner, thank you for watching, support for more market insight, have a great day and all the best to you!
The best qualification of a prophet is to have a good memory.
Information provided is only educational and should not be used to take action in the markets.
As you can examine when looking at my chart is that the index is trading above the 300-EMA which is marked in black and the 55-EMA which is marked in purple within my chart, these EMAs serving as meaningful support zones which hold the trend to the upside, therefore it is from high significance to hold minimum the 300-EMA in this structure, when considering single stocks from individual companies there are some weaker than the market trading below the EMA structure and some which are strong than the market trading above the EMAs, the weaker ones as I mentioned are good on the short-side and the reverse comes through for the stronger ones on the long-side as the crisis has shown which companies are solid and which do not have the necessary conditions to hold its level during the crisis similar to the dotcom-bubble in 2000 where the market provided a big selection where not every stock survived, in this case to look for these differences in the single stocks should be a smart approach for an arbitrage in the market as there is a high probability that these differences will increase the next months.
Furthermore, the index is trading in this big triangular shape formation which you can watch in my chart marked with the orange triangle, the major trendline which projected from the all-time-high to the current highs is forming the upper boundary here and the lower boundary consists of the rising channel the index is trading in. Now this formation will show a heavy breakout sooner or later, the longer the price stays in this formation the heavier will be the breakout and the confirmation in direction after the breakout. As the index is trading above strong support levels the bullish breakout scenario is more likely at the moment, to be exact there is a 65 % possibility to confirm this triangular shape formation to the upside and only a 35 % possibility to confirm it to the downside. The final breakout will show the confirmation and a trade can be placed, for now the best option is to wait for a breakout which confirms the triangle, and as the bullish breakout is more within the possible spectrum the best option is to prepare according to this scenario.
Remember that the more possible bullish breakout of this triangle does not mean the index and market are completely bullish in the middle and long term. It is in the first line signaling a test of higher remaining levels which can lead to a further conclusion, beside that there is still a real economy which is shaky and the rallies which we have seen are not necessarily fundamentally backed by the needed liquidity from the smart money, last months and weeks we have seen many retail traders rushing into the market and buying which can lead to a speculative rally especially as the smart money is staying out of the market, therefore, new tests of higher levels are definitely possible but the full bullish continuation should be seen with a critical eye as the bear market is still not completely over as soon as the reverse is evidenced. This means we should not take the full bullishness at face value and also keep the reverse perspective in mind to be prepared when new supply enters the market because of inrolling company insolvencies and increasing corona-fears to wage opportunities and possibilities in the right manner.
In this manner, thank you for watching, support for more market insight, have a great day and all the best to you!
The best qualification of a prophet is to have a good memory.
Information provided is only educational and should not be used to take action in the markets.
Note
ANALYSIS UPDATE: The RUSSELL 1000 completed the triangle formation with the more possible 65% bullish breakout.Since the RUSSELL 1000 completed the triangle formation it reached all of the target zones.
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